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THE NATIONAL MINIMUM WAGE
The national
minimum wage is an important cornerstone of Government strategy
aimed at providing employees with decent minimum standards and
fairness in the workplace. It applies to nearly all workers
and sets hourly rates below which pay must not be allowed to
fall. It helps business by ensuring companies will be able
to compete on the basis of quality of the goods and services they
provide and not on low prices based predominantly on low rates of
pay. The rates set are based on the recommendations of the
independent Low Pay Commission.
The National Minimum Wage has increased again in October 2005
The minimum wage is a legal right which covers
almost all workers above compulsory school leaving age. There are
different minimum wage rates for different groups of workers as
follows:
-
The main rate for workers aged 22 and over. On 1
October 2005 this rate was raised to £5.05 an hour, from £4.85
-
The accredited training rate for workers aged 22 and over who
are receiving accredited training in the first six months of a
job with a new employer. On 1 October 2005 this rate of the
minimum wage was raised to £4.25 an hour, from £4.10.
-
The development rate for 18-21 year olds. On 1
October 2005 rate of minimum wage was raised to £4.25 an hour,
from £4.10.
-
The development rate for 16-17 years olds. This rate is £3.00 an
hour.
It is important to note that these new rates only apply to pay
reference periods beginning on or after the date they came into
law.
16 and 17 year olds
rate
The Government accepted the Low Pay Commission's
recommendations for a new rate for 16 and 17 year olds (above
compulsory school leaving age)* in their 2004 report.
£3.00 per hour from 1 October 2004
NB: 16 and 17 year old apprentices are exempt from the
young workers rate.
*Compulsory
School Age
- In England and Wales: a person
is no longer of compulsory school age after the last Friday of
June of the school year in which their 16th birthday
occurs.
-
In
Northern Ireland: a person is no longer of compulsory school age
after the 30th June of the school year in which their
16th birthday occurs.
- In Scotland: pupils whose 16th
birthday falls between 1st March and 30th
September may not leave before the 31st May of that
year. Pupils aged 16 on or between 1st October and
the last day of February may not leave until the start of the
Christmas holidays in that school year.
For further information or if you think you are
being underpaid, call the minimum wage helpline on 0845 6000 678
Fair Piece Rates
From October 2004, the Government proposed that employers
have to pay their workers the minimum wage for every hour they
work or a fair piece rate initially set at 100% of the minimum
wage. The rate was increased to 120% of the minimum wage in April
2005 at which point most homeworkers will receive the minimum
wage.
The Government has produced guidance
(47Kb)
on
proposals to introduce fair piece rates for output workers,
including homeworkers. A
partial Regulatory
Impact Assessment
(82Kb)
estimating the costs and
benefits of these proposals is also available.
To check on how the National Minimum Wage applies to you (or your
staff), telephone the National Minimum Wage Helpline on 0845
6000 678. This is also the number to ring if you think you are
being underpaid and wish to make a complaint. You may also email
the helpline from the HM Revenue and Customs NMW website. All complaints
about underpayment of the National Minimum Wage are treated in
the strictest confidence and callers may remain anonymous if
they wish to do so.
You may also be interested in the following:
Government evidence to the Low Pay Commission - November 2004
(369Kb)
A Regulatory Impact
Assessment
(73Kb) has been produced
which considers the impact of proposals to increase the adult and
development rates of the NMW in October 2004.
The
Government has submitted evidence
(316Kb)
to
the Low Pay Commission on the advantages and disadvantages of a minimum wage for 16 and 17 year
olds and
on the proposed uprating of the minimum wage in 2004.
The
Government response to
the Consultation
(16Kb) on proposed
amendments to the National Minimum Wage Act in the Employment
Relations Bill has been published.
The
Government published the fourth
report
(1.15Mb)
of
the Low Pay Commission, together with a written
statement to Parliament and its response to the Commission's
recommendations
(24Kb)
on
19 March 2003.
The Government produced a Regulatory
Impact Assessment
(19Kb)
to estimate the costs and benefits to the economy
of the increases in the National Minimum Wage rates in October
2003.
If you have an unanswered question on general policy you can
e-mail the national
minimum wage policy team here at the DTI. However, queries about
the application of the national minimum wage or about individual
cases should be directed to the helpline.
Documents in pdf format, indicated with a
can be opened with Adobe Acrobat reader, available free of charge.
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Last updated 20 January 2006
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